Interim Xcel Rate Hike Showing Up In Electricity Bills

MINNEAPOLIS (WCCO) — It takes a lot of poles, plants and power lines to satisfy Minnesota’s demand for electricity. Xcel Energy has been meeting that challenge for decades.

But age is part of the company’s newest challenge. It is planning on spending millions of dollars to upgrade an aging infrastructure.

Xcel’s two nuclear generating stations at Prairie Island and Monticello have already outlived their initial designs. Costly upgrades are needed to both plants to secure their continued operation.

“We’re extending the life of our plants by 20 years. They were built in the 1970s so they need a substantial amount of investment to make sure they are safe and provide a long term reliable source of energy,” said Xcel’s Chris Clark, V.P of rates and regulatory affairs.

Clark explains the company’s 10.7 percent rate hike will add roughly $8 per month to the average residential customer’s electric bill. The interim rate hike will generate some $285 million to pay for infrastructure improvements, including an upgrade of Xcel’s 50-year-old transmission and distribution system. Another $40 million will be spent on an increased property tax liability.

But the rate hike comes at a time when consumers are using less electricity. Xcel is only expecting a 0.5 percent increase in energy demand for 2013.

“It seems pretty startling for a lot of us in Minneapolis residents paying more to use less electricity,” said Dylan Kesti with the group Minneapolis Energy Options.

That is a year-old campaign to educate city residents on an upcoming vote next fall to authorize the city council to take a greater role in franchise negotiations with Xcel. Every 20 years, the city renegotiates with the utility the amount of money it gets in reimbursement for granting Xcel right-of-ways.

Kesti said the campaign hopes to secure the city a larger voice in negotiating a cleaner and more affordable energy future.

“A lot of us were shocked when we got the piece of mail in our bills, and we were expecting to pay what we did month ago. Suddenly we get a 10-percent rate increase?” Kesti said.

But Xcel’s Chris Clark says that even energy conservation has a price when infrastructure needs to be maintained.

“We’ve saved the equivalent of nine plants over the course of our investment in energy conservation. That said, we still have a long-term investment in poles, plants and wires,” he said.

Public hearings on the interim rate increase will be held beginning March 4.